Getting help from a financial adviser in France
When it comes to investing our money, it pays to tread carefully. This is doubly relevant for those moving to or living in France. For many, it is the first time they have needed professional advice involving the totality of their life savings.
Add to this potential language issues, with unfamiliar rules and laws, and it is only natural to seek out those who can offer advice in our own language. This is often very useful, since local advisers and banks can rarely offer the (much needed) international perspective.
It is vital anyone moving to or living in France, should only ever take advice from those authorised and regulated by the French regulator. As good as a foreign regulator, such as the UK’s Financial Conduct Authority, might be, they simply have no mandate, qualification or ability to mediate on advice in France.
One of the main problems we have seen is people locked in to unsuitable financial products, recommended by advisers not authorised in France, that often have a considerable exit fee.
Much of this fee is amortisation of the adviser’s commission; where, rather than the adviser being paid an amount each year for the life of the investment, they opt instead to take maximum commission up front.
This means that the adviser has less financial interest in taking ongoing care of you although, of course, their professionalism should ensure they do. It also means that your investment may be immediately reduced in value by the full-term commission sum paid.
It is surprising that this practice can continue unchecked but by taking financial advice from those who are authorised outside France, or not at all, you are opening yourself up to actions which may not be acceptable under French regulation. Those who offer CIF level advice (qualified advisers on finance) in France, without the appropriate authorisation are subject to the standard rules under fraud, thus a minimum fine of €300,000 and five years in prison.
We meet many advisers working as self-employed / for international networks who are unaware that they may be acting outside approved limits and of the repercussions they may face for doing so.
They will often cite that they have the right to offer advice in France under the EU passporting system or that they have an ORIAS number (the register of insurance, banking and finance intermediaries), which is merely a register and no evidence of regulation in itself.
So how do you protect yourself, to ensure that you are getting the right advice?
Check the ORIAS register (www.orias.fr), bearing in mind that having an ORIAS number is not evidence of regulation, but it will offer details of who is. The register should show the category as Conseiller en Investissements Financiers (CIF).
On clicking through, it should have the AMF logo (French regulator) next to it. Other categories may be there but this is the one that matters for financial advice. If it is missing, stay clear.
However, this is not enough by itself to tell you all is well, as a company or network may have an authorised person but there is no way of knowing whether the person offering advice is authorised (unless you are dealing directly with the person listed on the register).
Check the terms of any financial product that you are offered. Anything that locks you in, with any fees for access, should be reviewed with care.
Check the paperwork details French legislation. If there is no mention of French law, it is unlikely that it is suitable for you.
Check exactly how the adviser is paid. If you are not paying the adviser directly, make sure you understand their payment set-up and are comfortable with it and the level of commission being paid up front, if applicable.
Professional advice is vital; these steps will help avoid being locked into a unfavourable situation.
This column was written by Robert Kent of Kentingtons financial advisers.
See www.kentingtons.com
